Nissan, Renault on Track to Complete Deal to Revamp Alliance

Masatsugu Horie and Albertina Torsoli
·3 min read
1

(Bloomberg) -- Nissan Motor Co.’s independent directors endorsed proposals from Renault SA to rebalance a 23-year-old alliance and pave the way for the French carmaker’s own revamp, two people familiar with the situation said.

Most Read from Bloomberg

Final talks are underway for Renault to reduce its stake in the Japanese carmaker over time to 15%, said the people, who asked not to be identified as the talks aren’t public. Nissan’s full board, including representatives from Renault, is expected to meet later this month to make a decision.

An alliance event could be held in early February, people familiar with the plans said. The meeting of Nissan’s independent directors Monday lasted for more than two hours, ending shortly before midnight Tokyo time, they said.

Nissan is also still negotiating an investment in Renault’s planned electric-vehicle carveout Ampere and must decide the level of investment, one of the people said. Nissan spokesman Shiro Nagai declined to comment. A spokesman for Renault also declined to comment on ongoing Nissan negotiations.

Renault, delivering on a turnaround plan, is in the middle of a sweeping overhaul to allow the carmaker to raise funds for electric-vehicle development and narrow the gap with bigger companies such as Tesla Inc. This includes the split of its electric-vehicle and combustion-engine businesses, backed by outside investors. At the same time, Renault and Nissan have been locked in talks for months over ways to rebalance lopsided capital ties that led to friction over the years.

“Tedious and lengthy negotiations might be about to end,” Stifel Europe Bank analyst Pierre-Yves Quemener said an an email. This will mean “less management attention lost in corporate politics and more focus on execution.”

Read More: Renault Said Open to Some Concessions to Strike Nissan Deal

Nissan may invest as much as $750 million for a stake of about 15% in Ampere even though there have been disagreements over valuation and the Japanese company could end up investing less than Renault initially hoped, people familiar with the talks have said. Renault is planning an initial public offering of Ampere for the second part of the year, depending on market conditions, and sees potential for a roughly €10 billion ($10.8 billion) valuation over time, the people have said.

The partnership, which also includes junior member Mitsubishi Motors Co., stems from Renault saving Nissan with a cash injection and turnaround under former leader Carlos Ghosn. The alliance has been under strain for years, with relations deteriorating after Ghosn’s 2018 arrest on alleged financial misconduct, as well as concerns over ownership ties. The French auto manufacturer owns 43% of Nissan, including voting rights, which in turn holds just 15% of non-voting shares in Renault.

The French government — Renault’s most powerful shareholder — has reassured Nissan it will support the rebalancing. Renault plans to sell down its stake over time to reach a 15% equal holding level, the people said. The French government reassurances were crucial for Nissan to move on with the agreement, the people said, after talks had reached an impasse.

As part of the proposals currently under discussion, Nissan won’t allow sharing of its e-Power hybrid technology within Horse, an entity Renault is creating for its legacy combustion-engine assets, the people said. Horse will be an equal partnership with China’s Zhejiang Geely Holding Co., people familiar with the talks said earlier.

Renault Chairman Jean-Dominique Senard and Chief Executive Officer Luca de Meo are expected to attend in person the next alliance operating board meeting in Japan, scheduled for Jan. 26 or 27, two people said. That would be followed by a Nissan board meeting to approve the deal, before the public event to unveil the agreement, they said.

Renault declined 0.3% at 11:15 a.m. in Paris trading, after gaining 19% so far this year. Nissan was up 2.7%.

--With assistance from Tsuyoshi Inajima.

(Updates with analyst comment in sixth, shares in last paragraph)

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.